Vulnerability And Poverty Dynamics In The Maldives

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Abstract

Despite rapid economic and social development of the Maldives, the vulnerability of the island population in terms of poverty remains high. Using household panel data for the period 1997/98 Ð 2004 we show that, although the majority of the poor manages to escape from poverty, a substantial part of the non-poor falls back into poverty at the same time. Using Logit regression analysis, the most influential determinants of escaping household poverty are shown to be: the level of education, participation in community activities, and the proportion of adults employed. Factors that have the largest impact on impeding a poverty escape are: the proportion of household members not working due to bad health, living in the North, and the proportion of female household members. The former two factors, in addition to household size, are also most influential on the odds of falling into poverty. Working in tourism, or the public sector, and taking out a loan to invest are important factors that prevent households from falling into poverty. Policy implications of these results are not only relevant at government level but also at household level. The government may consider paying more attention to the development of the two Northern regions, improve access to good quality education and health care, and further develop (private sector) tourism across the country. Household coping strategies involve investing in education, entering the labour market (especially in tourism and the public sector) and family planning.

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